WASHINGTON (CNN) -- The U.N. atomic watchdog agency says weapons inspectors have not uncovered evidence to support accusations that Iran has a secret nuclear weapons program.

However, a U.S. State Department official said the Bush administration still intends to work toward referring the matter to the U.N. Security Council for possible punitive action.

A report by the International Atomic Energy Agency accepts that Iran may not have produced HEU (highly enriched uranium), a key ingredient needed to produce nuclear weapons. HEU contamination had been found at the Kalaye Electric Company and at the Natanz sites in Iran.

"It appears plausible that the HEU contamination found at those locations may not have resulted from enrichment of uranium by Iran," the report said.

Iran has maintained that the source of the contamination was not domestically produced HEU but rather imported equipment -- specifically centrifuge equipment it said it purchased from Pakistan in the 1990s.

But the State Department official told CNN the picture is murkier than the IAEA report indicates, noting "there are too many pieces to explain it away as a peaceful program."

"We view with great concern the IAEA report that Iran is about to convert 37 tons of 'yellowcake' uranium into uranium hexaflouride gas, as well as Iran's recent announcement that it intends to test its gas centrifuge cascade," said Undersecretary of State for Arms Control John Bolton in a written statement to CNN.

"Iran's announcements are further strong evidence of the compelling need to take Iran's nuclear program to the Security Council. The United States will continue to urge other members of the IAEA Board of Governors to join us in this effort, to deal with the Iranian threat to international peace and security," Bolton wrote.

But, considering the tone and text of Wednesday's report, it appears unlikely the Bush administration will find support among the IAEA's 35-member body to refer the matter to the United Nations this month to consider imposing sanctions against Iran.

In Tehran, Iran's former representative to the IAEA, Ali Akbar Salehi, predicted that Iran`s nuclear case would not be referred to the Security Council.

"I predict that the next session of IAEA`s board of governors will not be a complicated and hot one," Salehi told IRNA, Iran's government-run news organization.

The agency knows that uranium enrichment has not been carried out in Iran, he said, adding, "We take it as a favorable decision."

Still, the IAEA report qualified its findings and said it is not ready to "draw definitive conclusions" about the "correctness and completeness" of Iran's declarations.

In particular, the report cited the appearance of low enriched uranium on domestically produced components in various locations in Iran and said it would "continue with its efforts to understand the source."

A second matter of concern to IAEA inspectors is the extent of Iran's efforts to acquire and use centrifuges of the P-1 and P-2 design, which could be used to produce nuclear weapons fuel.

A Western diplomat told CNN that IAEA inspectors believe they got a "very good fix" on Iran's development of these designs since 2002. But the diplomat said Iran had not provided enough information to back up its claim that no P-2 centrifuge-related activities or centrifuge-procurement activities occurred between 1995 and 2002.

The question, this diplomat said, is "can we trust what Iran has said on this file?" between 1995-2002 because "if it's incorrect that raises questions on other things" Iran has told the IAEA.

The report implies that its year-long investigation into the source of the HEU contamination and the origin of the P-2 centrifuge design has ended.

The IAEA report also cites "very good cooperation" by Iran with U.N. weapons inspectors in affording them access to suspected nuclear sites, but a spotty record on providing information "promptly."

Iran has maintained its enrichment program was devoted to peaceful purposes to produce nuclear energy, not nuclear weapons.

Although it was under no legal obligation to do so, Iran this year agreed to suspend its enrichment program as a show of good will to the international community.

According to the Western diplomat, enrichment facilities at Natanz are still "under seal" and U.N. inspectors have continued to monitor them.

But in July, Iran modified the terms of the agreement it made with France, Germany and Britain and started to produce and assemble centrifuge components, the Western diplomat said.